From a technical standpoint, this is one of the more attractive dollar charts at the moment in my view. The pair had largely been consolidating around 1.3300 to 1.3900 since the end of last year, and finally we might be seeing a break in that range.
The drop this week takes out the key trendline support (white line) and more importantly, the weekly close now may be set for a break below the November low of 1.3225. That will be a massive win for sellers if they can hold steadfast in their conviction.
Just going by the chart, it should lend to a break below 1.3200 and there is very little support standing in the way of a further run lower in USD/CAD.
The 100 and 200-week moving averages are seen at 1.3037-69 currently and they may be what offers buyers some reprieve before testing the 1.3000 mark itself. That does afford sellers with some room to roam in the meantime but the risk for those staying long in the loonie is that of oil prices I would say.
Even though equities have been enjoying a good run of form, oil has not been able to find much comfort ever since the Saudi surprise earlier this month. That could help to prevent a slide in USD/CAD but if equities continue to stay firm while the dollar flounders, the technical picture is certainly making a case for a further drop in the pair.
